The theft of pharmaceuticals has gone down dramatically in the past few years. Learn how they made such strides.
The average size of each pharmaceutical theft incident in U.S. in 2012 (to date) has been about $120K. Compare that to just four years ago, in 2009, when the average incident was about $4M. That is an astonishing more than30X reduction in just four years. Furthermore, the number of incidents during the same period has been cut in half. What is the cause of this phenomenal success? That was the focus of a talk I attended at the 2012 Life Sciences Supply Chain Summit by Chuck Forsaith, Director of Security at Purdue Pharma, and I think these lessons are worth sharing.
Consider the case of the largest pharmaceutical theft in recent years. On a stormy Friday night, March 14, 2010, thieves scaled up the side of Eli Lily’s Enfield, CT warehouse, cut a hole in the roof, rappelled down into the warehouse, and disabled the alarm system. For the next three and half hours, they filled a 53 foot trailer with about $76M of drugs (Prozac, Stattera, Cymbalta, Zyprexa, Gemzar, Alimta, and Efient). This same gang had already done heists at Bayer, GSK, and J&J, but those were all in the $3M-$10M range. How did that story end? Stay tuned below.
Meanwhile, here are some of the practices Mr. Forsaith says have helped reduce pharma theft:
Acquire expertise—Security is no longer just a blue collar job. It has become a white collar profession requiring college-educated specialists. You can’t depend on the retiree-age security guard at the front door. Most successful thefts are done by highly professional teams that do a lot of scouting, planning, and surveillance.
Background checks—In the past, it was not uncommon for pharmaceuticals to be simply handed over to a truck driver to take across the country, with virtually no background check on the driver. Now they play much closer attention to everyone that touches the product, including third parties like carriers and freight forwarders. Mandatory background checks are part of the agreements with third parties.
Physical security assessments—Logistics personnel and security personnel did not always work closely together. Now the security group does assessments of physical security of warehouses (fencing, lighting, guards, personnel access control, surveillance, intrusion detection systems, etc.) as well as the transportation routes and lanes used by the firm.
Know vulnerable times and places—By studying patterns, pharma companies realized that about half of all their thefts occurred on the weekend. And about four out of five cargo thefts occur when the transportation commodity is left alone. Then thieves don’t need guns; they just wait until the load is left alone and unguarded. Knowing where, when, and how theft is happening allows for more effective countermeasures.
Technology investments—Trucks are now outfitted with GPS tracking, anti-theft devices, temperature monitoring, and door open sensors. Some of them combine GPS with an ignition kill or braking features, so that if the truck goes outside of a geo-fence boundary, they can shut off the engine and/or apply the brakes (starting slowly, then harder and harder). Crooks have gotten smarter and will try to find and disable the GPS device and/or have another trailer waiting to offload the goods within a few minutes. To counteract this, shippers also may hide a small GPS device (about a quarter the size of a cell phone) somewhere on the trailer, or in the cargo itself. Trailers may also be outfitted with an electronic lock that requires a card swipe and/or PIN to get into the trailer. Some have a magnetic lock on the inside that can only be unlocked remotely via a secure cellular link.
Collaboration and sharing intelligence—This is perhaps the most powerful weapon. A great example is thePharmaceutical Cargo Security Coalition, which has over 1,000 members, including drug manufacturers, transportation carriers, freight forwarders, police, federal agencies, insurers, and risk and security firms. Their mission includes training and sharing lessons learned among members. But they also issue alerts whenever a theft has occurred. Another example is RxPATROL, created and funded by Purdue Pharma. RxPATROL collects, analyzes, and disseminates pharmacy theft intelligence to law enforcement nationally. And the FDA’s Cargo Theft Website provides notifications when FDA-regulated products have been stolen from warehouses or tractor-trailers.
This collaboration, intelligence sharing, and liaisons with law enforcement may be the biggest single element of success for the reduction in pharmaceutical theft. Remember the $76M Eli Lily heist I mentioned above? The case was given very high visibility. A description of the drugs and the lot numbers were sent out to distributors and wholesalers. As a result of all that publicity, none of the distributors wanted to touch those goods. All of the drugs stolen in the Eli Lily heist were recovered on May 3, 2012, when a major drug theft ring of 22 individuals was busted after a three-year undercover FBI probe. The drugs were found sitting in Florida, because the thieves were unable to sell them, largely due to the information communicated widely to the pharmaceutical distribution community.
Collaboration can also be local with neighbors. Warehouse operators should get to know their business neighbors and share contact numbers to report any suspicious activity, especially on the weekend or off hours. Neighbors can be great allies, as they generally also want the bad guys out of their neighborhood.
To drive home the point about the power of building up a network of intelligence sharing, Forsaith described a recent incident where a lone truck driver was delivering a load of pharmaceuticals from Texas to Atlanta. The driver stopped at a truck stop near the destination to get some sleep in his cab. When he woke up in the morning, the back doors had been opened and two pallets of injectable Dilaudid had been stolen. He called Mr. Forsaith, who got hold of law enforcement who started calling their informants. They recovered both pallets (90% of what had been stolen) within two hours. This was the power of the network they have put in place.
On October 5, 2012, President Obama signed the SAFE Doses Act, making medical theft a federal offense, punishable by up to 30 years in prison and a $1,000,000 fine. Stealing pharmaceuticals is not just a violation of property rights, but also a public health risk. This law gives thieves one more reason to think twice before trying to steal pharmaceuticals.
Other industries, such as electronics, jewelry, fashion, and liquor, face problems of cargo theft. They might be able to learn something from the steps taken and progress made in the pharmaceutical industry, especially via collaboration and intelligence sharing.
ChainLink Research is a widely respected supply chain and enterprise research and advisory firm, conducting forward-looking, thought provoking, and actionable research. Click here to see more from ChainLink Research’s Life Science Supply Chain-related library of research.
Norbert Dentressangle and the private equity firm Oak Hill Capital Partners announced today that they have signed an agreement to acquire all the shares of the U.S. logistics and transport company Jacobson.
Women In Logistics Video Part 2; Reverse Logistics Opportunities; Social Media and Supply Chains
Mark Millar looks at reverse logistics, suggesting how the problems generated by customers returning products can be remedied and even turned into advantages.